TGI Friday's Australia Pty Ltd v TGI Friday's Inc

The facts 5 The primary facts found by the trial judge are not in dispute. We take this summary from his Honour's reasons for judgment. 6 The letters TGIF are an acronym for Thank God It's Friday, a catch phrase that was current as long ago as the 1940s. Mr Hesky first heard it in the 1960s when he was a student in America. In the early 1980s, Mr Hesky visited a Honolulu restaurant called TGI Friday that was operated by one of Friday's Inc's franchisees. Upon his return to Australia, he investigated the possibility of registering that name in New South Wales, as a business name; but someone else had already done so. Later on, however, Mr Hesky found the other person's registration had not been renewed and he obtained registration. 7 In December 1985 Friday's Inc applied for registration of the trade mark TGI FRIDAY'Sin respect of "restaurant services and alcoholic beverage bar services". Big Country opposed the application but its opposition was dismissed in 1991. After overcoming opposition from another quarter, the trade mark was eventually registered in July 1997. 8 In the meantime, on 15 June 1994, The Australian Financial Review reported that Friday's Inchad awarded a franchise for the operation of its restaurants in Australia. That same day, Mr Hesky lodged an application to reserve the name, TGI Friday's Australia Pty Limited, in respect of an intended company. One week later, Friday's Australia was registered by the Australian Securities Commission. 9 In August 1995 Friday's Inc entered into a franchise agreement whereby it licensed TGI Friday's Developments Pty Ltd ("Developments") to operate a restaurant under the name TGI Friday's at South Yarra, Melbourne. This restaurant opened in October 1995. In January 1997 Developments opened a second TGI Friday's restaurant, at Doncaster, Melbourne. 10 The trial judge gave the following description of the Friday's Inc chain: "A restaurant and bar called T.G.I. Friday's opened in New York City in 1965. The applicant acquired that business in 1972. By mid-1996 the TGI Friday's chain comprised almost 400 restaurants operated by the applicant or its franchisees. They are spread widely across the United States in cities and towns of all sizes with several located in some metropolises and conurbations. There are also restaurants in twenty-nine countries outside the United States. There are over twenty T.G.I. Friday's restaurants in the United Kingdom. In addition to restaurant services, various goods are also sold under the trade mark T.G.I. Friday's. The combined sales revenues are immense. T.G.I. Friday's restaurants provide what is described as casual dining. A cocktail bar is prominently placed in the restaurants which are decorated with red and white stripes and 'memorabilia'. The menu items are also said to provide differentiation. Customer service is standardized across the chain. Most importantly, each restaurant bears a sign with the name T.G.I. FRIDAY'S in a distinctive script, although the placement on each sign of the initials T.G.I. in relation to the word FRIDAY'S appears not to be uniform. The total expenditure on advertising and promotion of the restaurants is also huge." 11 In the early 1980s, Big Country developed a shopping centre at Raby, near Campbelltown. The trial judge described this location as being "on the south-western fringe of Sydney's urban sprawl". The development included a hotel, the Raby Tavern, which opened in November 1984. The trial judge described the situation that occurred: "The Raby Tavern has a lounge bar and a public bar which are separated by shared toilet facilities. An entrance to the lounge bar faces Spitfire Drive. In May 1985 or thereabouts the words 'T.G.I. Friday's' were painted on a window pane above this entrance and a neon sign bearing the same words was installed behind the centre pane of a window next to the entrance. Between 1985 and 1987 entertainment was provided in the lounge bar area. There was recorded dance music on Wednesdays to Sundays combined with live bands on Thursdays, Fridays and Saturdays. Advertisements for the Raby Tavern described forthcoming Friday entertainment by reference to the words 'TGI Friday's'. Many of the advertisements were headed 'Fillies'. … Mr Hesky says that the lounge bar has always used the name 'T.G.I. Friday's'. Mr Aidan Smith, who managed the Raby Tavern from its opening until May 1988, says that 'Fillies' was the name given to the old public bar area in about mid-1987. This sounds rather odd because he confirms that the live entertainment at all times took place in [a] larger bar area close to the drive-in bottle sales area on Spitfire Drive. The advertisements plainly suggest that the bands and dance music were associated with Fillies. Mr Hesky's recollection of events at the time may be safely disregarded. He could not recall ever having seen a sign bearing the name 'Fillies' which, it must be accepted, was prominently displayed at the other entrance to the tavern. Indeed, it is clear that, until an entertainment licence was obtained for the tavern in about 1987, the two glass doors at the entrance to the lounge bar were marked 'Colonial Room'." 12 Between about mid-1989 and early 1996, Big Country leased the Raby Tavern to an unassociated company. During this period, Mr Hesky maintained his registration of the business name and, as mentioned, formed Friday's Australia . Also during this period, about 1989-90, Mr Hesky had contact with Wallace Doolin, a senior officer of Friday's Inc. He asked Mr Doolin for $1,000,000 to give up the "right" to the name TGI Friday's in Australia. Mr Doolin refused this request. 13 In November 1994 Big Country purchased the Grey Gums Hotel/Motel at Penrith, a suburb on Sydney's western fringe. During the following year, Big Country purchased land in Reserve Road, Artarmon. This land was near the company's headquarters in Carlotta Street, Artarmon. The trial judge described what happened in relation to Penrith and Reserve Road. "The respondent [Big Country] completely refurbished the Grey Gums Hotel. It added to the front of the building gable roofs over entry porches to different sections of the hotel. One of these sections is designated as a cocktail bar on the plans in evidence. In April 1996 the respondent painted the name T.G.I. Friday's on the gable roof over the porch leading to this section. The name is written in the same primary colours of red, black and white as the applicant employs in its logo. Mr Darren Smith, the manager of the Grey Gums Hotel, describes this section as the lounge bar. It contains a bistro where lunch and dinner are served. The menu is labelled 'T.G.I. Friday's'. Entertainment has also been provided in this area since October 1996. Mr Hesky registered the respondent as the proprietor of a business called 'T.G.I. Friday's Restaurant' carried on at both the Grey Gums site and the Reserve Road site. In fact, no restaurant business was carried on at Reserve Road or, for that matter, at Carlotta Street. However, in May 1996 the respondent erected a sign on the Reserve Road site announcing 'T.G.I. Friday's Is Coming Soon' with the words T.G.I. Friday's depicted in the same colours and style as was done at Penrith. The respondent has obtained development consent for a hotel on the Reserve Road site. Plans for the hotel are in evidence together with Mr Hesky's handwritten notes for the layout of the lounge bar, which the respondent proposes to call T.G.I. Friday's. The early plans show a bistro area between the public bar and the lounge bar. Mr Hesky was at pains to suggest that it was now proposed such an area should be more in the nature of a sandwich shop which was open to passers-by generally and independent of the alcoholic beverage services provided to patrons in the adjoining bar areas of the licensed premises. However, I regret to say that Mr Hesky's evidence in this respect struck me as contrived so as to give the impression that it was not proposed that the name T.G.I. Friday's be used in connexion with restaurant services of the type conducted by the applicant's franchisees. Mr Hesky acknowledged, albeit somewhat grudgingly, that his notes betrayed the influence of the design and memorabilia used in T.G.I. Friday's restaurants. He pointed out that he had also been influenced by design features in other themed restaurants in the United States and in at least one Sydney hotel. The respondent also hoisted its new T.G.I. Friday's sign on a wall of the Raby Tavern soon after it resumed operating those premises in about April 1996. When the first of the proceedings now before the Court was threatened by the applicant, Mr Hesky arranged to advertise the Grey Gums Hotel and the Raby Tavern using the name T.G.I. Friday's. Mr Hesky denies that the erection of the sign at Artarmon by the respondent was intended to convey an impression that a restaurant forming part of the applicant's chain was coming to that site. He says that it was meant to convey an association with the respondent's premises at Raby and Penrith. I find this suggestion quite fantastic." 14 In setting out his conclusions concerning NG678 of 1996, the trial judge said: "The conduct of Mr Hesky must be at the forefront of any consideration of reputation. It is clear that he set out to pirate the name TGI Friday's for use in connexion with premises licensed to sell liquor. His early efforts were plainly not such as to involve trade mark use. However that may be and notwithstanding the consistent advice of his solicitors and trade mark attorneys as to the limited usefulness of business names registration, Mr Hesky's conduct manifested his obvious recognition of a commercial advantage attaching to association with the name of the restaurants in the applicant's chain. This provides, as counsel for the applicant submit, a 'reliable and expert opinion' both as to reputation itself and the likely consequences of the respondent's conduct: Australian Woollen Mills Ltd v Commonwealth (1937) 58 CLR 641 at 657. I have mentioned the ubiquitousness of the applicant's restaurants or those of its franchisees. It does not matter that Developments saw a need to promote the brand name in Australia. I may be permitted to know of the importance of brand marketing in modern commerce. The very size of a chain, both the number of sites and sales volumes, will readily permit an inference to be drawn as to its reputation. There are, of course, many brand names, such as say XXXX, which are well known in one country for one product and in another for a very different product. But in this case the evidence of overseas visits by a number of Australians allows me to be satisfied that the TGI Fridays restaurants have acquired a not insignificant reputation in Australia. Counsel for the respondent draws attention to the registration and use in other countries by the applicant or TGIFM of other names, such as Friday's The American Bistro, Thank God It's Friday and Friday's. There is ample evidence that T.G.I. Friday's restaurants are often referred to, even in their own advertising and internal communications, as Friday's. But that does not mean that by 1996 when the respondent erected its signs the applicant's name T.G.I. Friday's had not acquired a distinctive reputation. The respondent relies upon a mass of evidence to show that the expression Thank God It's Friday has been extensively used at many locations throughout Australia. It is, of course, used in promoting activities on a Friday, which has become recognised as a day or evening of celebration for those white-collar workers lucky enough to enjoy a regular five-day working week. Even respectable law firms, where once a fairly weak punch at the annual Christmas party was the only time alcohol was ever permitted, now have regular Friday night drinks under some such banner. Bonhomie blazes everywhere on Friday nights now in a sea aflame with alcohol. The applicant and the Weller organization eventually compromised their litigation arising out of the Deputy Registrar's decision of 4 November 1994. They very terms of the parties' deed of settlement tend to confirm the distinctiveness of the reputation of the restaurants in the applicant's chain. It does not matter that the trade mark registration was in respect of services described simply as restaurant services, or that such registration gives no right to the exclusive use of the letters TGI. The fact is that the name T.G.I. Friday's is peculiarly distinctive in its use in relation to licensed premises where meals are provided. That use is not the same as promotion of events on a Friday night. Nor is it the same as the use on other days of the week of the name Friday's in different contexts. It may be that the denizens of the Raby Tavern and the Grey Gums Hotel would appear to be from another planet to the patrons of a bar at the corner of 63rd Street and First Avenue on the island of Manhattan. That is why the respondent's conduct in hoisting its signs with the T.G.I. Friday's name in the colours of the applicant's logo and so blatantly contravening ss52 and 53(c) of Trade Practices Act calls for restraint. The applicant has also established the elements of the tort of passing-off, as they were explained in Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361 at 369. The public is likely to believe that the services offered by the respondent are those of the applicant or one of its franchisees."

Submissions on the appeal 15 The written submissions provided to the Court by counsel for the appellants (Friday's Australia and Big Country) focus on the nature, appearance and manner of operation of the Raby Tavern and Grey Gums Hotel/Motel. Counsel describe each of these establishments as "a pub on the outskirts of Sydney" offering food of a standard one would expect in such a place. Since 1985 one of the bars of the Raby Tavern has had TGI Friday painted above its door and a neon sign in its window bearing the same words. Over the years, the hotel has used these words in local newspaper advertisements of its Friday night entertainment. A further sign was erected in 1996. 16 Counsel say the situation is similar, although more recent, at Penrith. In relation to Artarmon, counsel point out there was only ever a sign at this site. There is no evidence the sign caused confusion; and the same statement may be made about Raby and Penrith. 17 Counsel for the appellants submit their opponents' case at trial faced the following hurdles: "(a) their name was not inherently distinctive. There was evidence of many uses of the expression 'Thank God Its Friday' and its abbreviations which were associated with relaxation. There was evidence of many uses of the expression 'Thank God Its Friday' and its abbreviations and 'Friday's' in other businesses; (b) they traded in such a way that any reputation that may have been acquired was confined to a combination of 'TGI Friday's' with a particular get up which included specific script, restaurant style and dominant use of the word 'Friday's'; (c) the Appellant only used the name 'TGI Friday's' and not only did not use any part of the Respondents' get up but used many distinguishing features; (d) they could not prove a sufficient reputation in NSW; (e) the reliance on the intentions of Mr Hesky did not logically advance their cause." 18 In developing the first point, counsel point out that TGI Friday's, Friday's and TGI Friday are ordinary English expressions, not original to the respondents or initially associated with them. The phrase is widely used to connote relaxation with a drink and is used in many Australian bars and restaurants. 19 Counsel say that any reputation in the words acquired by the respondents is a reputation associated with a particular get up, which is not copied by the appellants. In this respect they refer to evidence given by Stuart Wing, who was General Manager of Developments until shortly before the trial. Mr Wing said all Friday's Inc restaurants employed "the same distinctive design, layout and menus". He was asked about this: "What are you referring to as the distinctive design, layout and menus?---Well, the distinctive layout predominantly refers to the feature of the central bar which is a feature in virtually every TGI Friday's around the world. Within that there is the use of layering within the restaurant that defines particular dining segments, so that would be the layout. The décor we have discussed. Within décor you include what?---Oh, brass. Rails?---Brass rails, glass, tiffany lights, panelling, polished floor boards, red bricks on the floor. Particular pieces of lighting within the restaurant. It is a visual package that is unique to TGI Friday's. Plus the 1940s memorabilia?---Yes, of course, including the memorabilia. And the black and white portraits?---I think in the Jam Factory restaurant there are probably something like 200 individual framed pieces, some of which are black and white, some of which aren't. I do not think the black and white in itself is the most important. The red and white stripes referred to in your first paragraph 3, does that appear both on tablecloths, firstly?---In some restaurants, yes. Not on all tables. And in awnings?---Yes. And on the shirts of waiting staff?---Yes. And is this right; that the design of the restaurants is maintained to such a degree of similarity that a staff member can go from any TGI restaurant around the world to another one and feel at home?---Well, not only staff, patrons. But in terms of staff, so that, for example, particular drinks have the same key numbers on the cash register?---No, that's not correct. They have the same recipes. And functional layout of equipment?---No. There is some commonality between restaurants but as restaurants in different markets develop the individual operators are allowed to make whatever is necessary, the changes that are necessary. Provided they maintain the fundamentals?---Provided they maintain the fundamentals of exceeding the guest experience in delivering the food, the product, the décor and the atmosphere, which are the cornerstones of the Friday's brand, TGI Friday's brand." 20 In replying to these submissions, counsel for the respondents emphasise the trial judge's findings about reputation and Mr Hesky's conduct. They say the relevant conduct of the appellants commenced after publication of the newspaper article in June 1994; the earlier use of the words TGI Friday's at the Raby Tavern was inconsequential. As at June 1994, counsel say, Friday's Inc had a worldwide reputation. Although it had not yet opened an Australian restaurant, 19 Australian witnesses deposed to having patronised its restaurants overseas. 21 Counsel for the respondents argue that April 1996 was a significant date; it was about that time that Mr Hesky caused to be installed at the Penrith Hotel (then under reconstruction) what they call "his newly styled red, white and black 'TGI Friday's' signage". He subsequently erected this same signage at the Raby Tavern and on the Artarmon land. Counsel say these events "changed dramatically" the use of the name by Friday's Australia . 22 Counsel point to the evidence about establishment of the Melbourne restaurants, contending this shows that, by April 1996, Friday's Inc had a local reputation as well as one deriving from its international activities. Conclusions 23 This case demonstrates the truth of the old adage about one picture being worth a thousand words. With respect to the trial judge, the respondents' cases under ss52 and 53(c) of the Trade Practices Act and the law of passing off cannot survive consideration of the photographic evidence. [We put the matter in that way in order to make clear that we make no comment about the trade marks claim of Friday's Inc, which turns on different considerations.] 24 It is of the essence of the respondents' claims under s52 and s53(c) of the Trade Practices Act that the appellants' conduct is misleading in that it suggests that Friday's Inc is associated with the services provided at Raby Tavern and the Grey Gums Hotel/Motel and foreshadowed at Artarmon. The respondents' passing off case depends upon the existence of a similar misrepresentation, by virtue of which the appellants misappropriate the respondents' goodwill or otherwise damage their business. As Lord Diplock said in Star Industrial Co Ltd v Yap Kwee Kor [1976] FSR 256 at 269 (in a passage approved by the House of Lords in Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 at 752): "A passing off action is a remedy for the invasion of a right of property not in the mark, name or get up improperly used, but in the business or goodwill likely to be injured by the misrepresentation made by passing off one person's goods as the goods of another". In the present case, we are not concerned with passing off goods; the case is about restaurant services. 25 In Reckitt & Colman Products Ltd v Borden Inc (1990) 17 IPR 1, Lord Oliver expressed a similar idea when he listed the three elements that have to be demonstrated in a passing off action: "(1) that the trader's get-up, including any brand name, is recognised by the public as distinctive specifically of the plaintiff's goods; (2) that there has been a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods offered by the defendant are the plaintiff's goods (whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods is immaterial, provided they are identified with a particular source, eg by means of a brand name which is in fact the plaintiff's); (3) that the plaintiff suffers or, in a quia timet action is likely to suffer, damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the course of the defendant's goods is the same as the source of those offered by the plaintiff." This passage was adopted by the Full Court of this Court in a case mentioned by the trial judge, Vieright Pty Ltd v Myer Stores Ltd at 31 IPR 369. 26 It is important also to remember the pithy observation of Deane and Fitzgerald JJ in Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 196: "A party seeking relief in a passing off action must establish some actual or probable damage." 27 The respondents to the present appeal do not claim the name TGI Friday's was invented by them or is inherently descriptive of their business. Nor is the use of the name peculiar to them. The evidence establishes that the full name, or some recognisable corruption of it, is used by a wide range of Australian businesses offering relaxation and refreshment. The respondents' case, whether under the Trade Practices Act or the law of passing off, depends on the argument that, by April 1996, they had acquired a reputation in the use of that name in connection with restaurants, they having operated restaurants under that name in many countries, including in Australia from October 1995. However, as Mr Wing made clear, this use was always associated with a particular "distinctive layout" and type of décor. The photographs bear out this claim. They showFriday's Inc restaurants in many countries. Although there are some differences in get up, there is a consistency of style. For example, the name TGI Friday's is invariably shown in block capitals, with the letters TGI being smaller than those used in the word Friday's. With only a couple of exceptions, the outside of the building is adorned with a red and white diagonal striped awning. The combination of these elements makes the outside of the restaurants, wherever situated, instantly recognisable to anyone who has ever patronised one of them, as no doubt the respondents intended. And when one gets inside, there are the peculiarities of décor mentioned by Mr Wing. In his words, the elements of the décor combine to present "a visual package that is unique to TGI Friday's". 28 The contrast with the appellants' use of the name could hardly be more stark. At neither Raby nor Penrith is the name used to denote the establishment itself, but merely a bar in a hotel; in both cases a very ordinary bar in a very ordinary suburban hotel, albeit one in which light meals are available. Secondly, in every case the appellants put Friday's or Friday in cursive script. The lettering is quite unlike that used by Friday's Inc. The appellants have no equivalent of Friday's Inc's red and white awning. Their internal décor bears no resemblance to that described by Mr Wing. These differences would be so obvious to any intending patron of the appellants' hotels who knew of Friday's Inc's restaurants that he or she would immediately assume the hotel's use of the name to be coincidental; the differences proclaim disassociation. 29 In a passage from his reasons quoted in para 14 above, the trial judge referred to the appellants' signs being "in the colours of the applicant's logo". With respect, this is not correct. Friday's Inc appears not to have a logo, strictly so called, but merely a practice of showing its name in block letters. However, the photographs show that, unusually perhaps for a chain of restaurants, Friday's Inc does not adopt a standard colour for its name. Even on the same premises, one name sign may be in one colour and another in a different colour. It is true that red (the colour mostly frequently used by the appellants) is sometimes used, but the red generally comes with yellow dot points that yield a very different hue. The photographs of other Friday's Inc restaurants show a common (perhaps predominant) use of other colours, notably yellow. 30 The trial judge was critical of Mr Hesky's conduct. We share this reaction. Mr Hesky seems to have behaved opportunistically. But, as his Honour realised, the case is not to be determined by reference to Mr Hesky's behaviour. Lockhart J pointed out in Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 345, that "… deliberate copying of the plaintiff's goods does not always evidence an intention to deceive; it may indicate nothing more than realisation that the plaintiff has a useful idea which the defendant can turn to his own advantage, though not intending to pass off his goods as those of the plaintiff". In the present case, the trial judge's findings seem to establish that Mr Hesky saw the possibility of extracting a "greenmail" payment from Friday's Inc and acted accordingly. This is not laudable behaviour, but it is a different thing to intending to pass off his company's services as those of Friday's Inc. 31 The critical question is whether there is a probability that the use of the name TGI Friday's by either of the appellants misleads, or will mislead, members of the public into believing that any of the hotels are, or will be, associated with the restaurants operated by Friday's Inc. This question falls to be resolved by undisputed evidence, primarily the photographic evidence. That being so, we are in no worse position than the trial judge, in reaching a conclusion about it. 32 For the reasons indicated, we respectfully disagree with his Honour's conclusion that the public is likely to believe the appellants' services to be those of Friday's Inc. It follows that we find the respondents' claims under s52 and s53(c) of the Trade Practices Act and the law of passing off not established. The appeal should be allowed with costs and the orders of the trial judge set aside. In lieu of those orders, it should be ordered that proceeding NG678 of 1996 be dismissed. Having regard to the fact that the trial of this proceeding was intertwined with that of the other proceedings, we reserve to his Honour the appropriate order in respect of the costs of the trial. I certify that the preceding thirty-one (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Wilcox, Kiefel and Emmett JJ.

Associate: Dated: 26 March 1999 Counsel for the Appellants: A J L Bannon SC and J R Baird

Counsel for the Respondents: D K Catterns QC and J V Nicholas